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Russia has warned that the United Arab Emirates’ shock exit from Opec will drive a fall in oil prices once the Middle East conflict ends, but has confirmed that it intends to remain within the wider Opec+ alliance.
Russia’s finance minister Anton Siluanov said on Wednesday that without limits imposed by the oil cartel, the UAE would probably pump oil at will.
Today, the market “is constrained by the Strait of Hormuz, but what will happen tomorrow?” Siluanov said. “What will happen if Opec countries pursue their policies in an uncoordinated way? Prices will go down.”
His comments underscore analysts’ fears that the sudden exit of Opec’s third-biggest producer will drive a price war when the conflict in the Middle East subsides, as Gulf countries try to recover market share.
Kim Fustier, senior global oil and gas analyst at HSBC, estimates that the Abu Dhabi National Oil Company could target production of more than 4.5mn barrels a day (b/d) once shipping through the Strait of Hormuz is restored, up from a quota of 3.4mn b/d in May 2026.
“The UAE’s exit could weaken Opec+’s ability to manage supply, put pressure on Saudi Arabia’s price management strategy, and encourage compliance drift among remaining members,” Fustier said in a note.
Oil prices have continued to climb since the UAE announced on Tuesday that it was leaving Opec and Opec+, as the move will have no immediate impact on the country’s output. The situation in the Strait of Hormuz, where only a small number of vessels are succeeding in exiting the chokepoint, is capping the UAE’s output far more than its Opec quota did.
But the calculation would change if shipping through the strait returned to anywhere near normal levels, Siluanov acknowledged, adding that Russia must brace for lower oil prices following a resolution to the Middle East conflict.
“Our budget must have a sufficient buffer for at least three years,” he said. “During this period, oil-producing companies will reorient themselves in the global market.”
Kremlin spokesperson Dmitry Peskov told reporters later on Wednesday that Russia itself would remain part of Opec+ and that Moscow hoped the UAE’s exit would not spell the end of the alliance — as some analysts have predicted.
Another Opec+ member, Kazakhstan, also confirmed that leaving the grouping was “not on the agenda”.
The UAE’s exit takes Opec’s membership down to 11 countries, while there are a further 10 countries participating in the “Declaration of Cooperation”, widely known as Opec+.
While Opec’s share of global oil production has waned in recent decades as countries outside the group, particularly the US, have increased their supply, Opec+ still accounts for about 36 per cent of output worldwide.
The UAE’s energy minister Suhail al-Mazrouei told the FT on Tuesday that his country’s move was a “sovereign national decision grounded on the UAE’s long-term strategic and economic vision and evolving energy profile”.
The relationship between the UAE and Opec’s de facto leader, Saudi Arabia, has soured in recent years.
Russia formed an alliance with Opec in 2016 in a bid to prop up global prices. While Moscow agreed to work as an Opec+ member, the relationship was sometimes strained in the early years by its reluctance to proceed with output cuts.
The relationship has faced fewer tests in recent years as the Russian oil sector has been marred by sanctions and attacks on its infrastructure following Moscow’s 2022 full-scale invasion of Ukraine.
Data visualisation by Alan Smith and Janina Conboye
